An advantage of a consumption tax over the present tax system is that a consumption tax
A)raises more revenues.
B)would save the government millions in administrative costs.
C)places more of the tax burden on the wealthy.
D)does not discourage saving.

Question

Quizplus · Accepted Answer

A consumption tax does not discourage saving because it only taxes the act of spending money, rather than taxing the income that is earned and then saved. This can encourage individuals to save more, which can be beneficial for long-term economic growth. Additionally, while it may not necessarily raise more revenues, it is often seen as a more efficient and simpler tax system that would save the government millions in administrative costs. It does not necessarily place more of the tax burden on the wealthy, as this would depend on the specific design of the tax.

An Advantage of a Consumption Tax Over the Present Tax